SmartSTART Series: Start-up Basics. Experienced executive volunteers Seminars and workshops Free Mentoring In person Via e-mail Nationally: www.score.org East Bay SCORE In person at several locations Web: eastbayscore.org. About SCORE. East Bay SCORE. 48 experienced counselors
Seminars and workshops
East Bay SCORE
In person at several locations
Different Paths to Owning your Business
Marketing & Selling
Organization, Legal Structure, Insurance, Regulations
Funding and Cash Management
Laszlo G. Bonnyay
Briefly tell us a bit about you:
Your Business idea (s)
What you want to learn today
Nice to Meet You!
Myth: All I need is a good idea to be a successful entrepreneur.
Reality: A good idea is a great start, but it takes hard work, research, and planning plus successful plan execution to turn your idea into a profitable enterprise.
Myth: If you go out on your own, you won’t have to work so hard or such long hours.
Reality: You’ll probably work harder and longer than you’ve ever worked before, but you might enjoy it more. Exhaustion fades at the moment you proudly say, “I did this!”
Myth: You’ll be able to deduct everything so you don’t have to pay taxes.
Reality: You will pay taxes (income, sales, property, licenses, etc.)
Income taxes are based on your revenue less all business related expenses (“net” income).
Myth: If you work independently, you won’t have to report to a boss.
Reality: You don’t have a single boss, you have many: your clients and customers, your suppliers, city officials, etc. They each have specific needs and requirements. Your challenge is to keep all of them satisfied.
Myth: Business owners get to do the work they want to do and only what they find interesting.
Reality: Think again. You will have to wear many hats and juggle many skills, some of which may bore you or be downright challenging.
Myth: If you choose to be self-employed, you’ll be limited in what you can achieve, since you’ll be working alone.
Reality: There will be limitations but also plenty of opportunities. Be realistic, but don’t trap yourself with self-imposed limitations.
Ninety percent of new businesses fail within the first four years?
Or maybe it’s 80%? Or 70%?
The Big Myth
Percent of New Businesses after Four Years
Ability to lead and manage multiple tasks.
Knowledge of and experience in the industry (Customers, competitors, opportunities)
Willingness to learn from others
Critical Success Factors
Is the Leader/Strategist
Number One Salesman
Is the Chief Customer Advocate
Go into Business
Can choose location, name, logo, relationships
Can explore new markets and directions
See your dreams come true
No base, must build all new
No track record = difficulty in financing
See your dream become a nightmare
Start a New Business
Known quantity, proven formula/name
Help in starting and running business
Can review records
Easier to obtain financing
Potential hidden issues: debts, poor reputation, loyalty to owner, out-of-date inventory or transfer issues
Valuation of the business
No guarantee that success will continue
No guarantee the business can be improved
Buy a Business
Training, professional guidance
Continued consulting relationship
Access to other franchisees for help
Limited control – not full freedom to act
Franchise = royalty and other fees
Operational boundaries and limited choices
Franchisor problems are your problems
Buy a Franchise
May qualify for government or foundation grants
Protection from liability for directors and employees
Can pay salaries to employees and consulting fees for contractors
Focus on educational or charitable purposes and cannot profit those who created the organization
All profits remain within the organization
Must apply and qualify for 501c3 status or sales tax exemption
Form a Non-Profit Corporation
Tax Advantages** - Sq Ft of total home - Percentage of utilities
Zoning or deed restrictions
Isolation from others
Market Position-Your Value Proposition
Product and/or Service
Total cost to serve
Credit terms and discounts
Price and quality
Reputation: strengths and weaknesses
Personal visits and observations
Suppliers & contractors
Other businesses in area
Know the Competition
Making Initial Contact
“Business Concept Feasibility Assessment”
in your handout
Legal Forms, Insurance, Regulations, Advisors
Suitable for most start-ups
Require careful preparation
MUST have formal agreement,
Limited Liability Company
MUST have formal agreement
Easy to create and maintain
Corporation (C or S)
Require more administration
Offer limited liability
Business Organization Forms
Errors and Omissions
Employee Group Health
Life (Key employee, partners)
Federal and State Labor Laws
Income Tax Withholding
Social Security Payments
Sales Tax Collections and Payments
A “Sounding Board”
Board of Advisors
Board of Directors
Every Owner Needs Support:
Any income not from business
Amount in savings
Funds from Investors (e.g. friends and family)
Assets for Collateral
Personal Financial Condition
Tools and equipment
Licenses and permits
Working capital reserve fund
(Six to Twelve Months of Total
Start-up Funding Needs
Taxes and fees
Loan interest/ principal
Sources of Capital
Does NOT Signify Ownership
Deposit all receipts “intact”
Use a petty cash fund
Separate sales tax receipts on your books
Hang on to cash as long as possible
Reconcile bank account monthly
Cash: Most Important Asset
Becomes foundation for planning
Powerful management tool
Communicates owner’s ideas
Business Plan Importance
Section One: The Business
Section Four: Supporting Data
Business Plan Contents
How much money needed
How the money will be used
Whether you will seek a loan or investors
When you will repay loans
Product or service
Management and personnel
Use of new funds
Section 1: Business Summary
How is your product or service different/better?
How is the market reached?
Required pricing to make a profit?
Who are your competitors and where are they located?
Section 2 - Marketing Plan
Data you need is most likely available - the trick is to dig and find it!
Chambers of Commerce
Market Plan Data Sources
Capital equipment list dig and find it!
Income and expenses
Assets, liabilities & equity
Sources & applications of funds (cash flow)
Historical records (including variation analysis)
Section 3: Financial Forecasts
Next Steps dig and find it!
Now What? dig and find it!
“The best way to predict the future is to create it.” dig and find it!
- Peter Drucker
Are you ready to create your future? Would you like support with taking the next step in starting your own successful business?
Sign-up for SmartSTART Series
Sign-up for the Remaining Workshops!
Start-up Basics dig and find it!
Funding Sources & Next Steps
Testing Your Business Ideas
Handout: dig and find it!
free CD for
SmartSTART dig and find it! Series
Cal State CenterSan Ramon
Thu. Feb. 3 Sat. Feb. 12
Thu. Feb. 17 Sat. Feb 26
Thu. Mar. 3 Sat. Mar. 12
Thu. Mar. 17 Sat. Mar. 26
Process Roadmap dig and find it!
“GO OR NO GO” DECISION & NEXT STEPS
Locations & Sign-Up dig and find it!
Cal State Center
Oakland, CA 94067
San Ramon Community Center
12501 Alcosta Boulevard
San Ramon, CA 94583
Sign-up at www.eastbayscore.com
or call 510-273-6611
Help Us Help You dig and find it!
Please Answer the Following Questions: